ARM Stock Tumbles as CEO Warns of Supply Risks for Q2 Semiconductor Chip Sales

Key Takeaways

ARM’s adjusted earnings per share are projected to reach $9 by 2031.
Record quarterly revenue of $1.49 billion for the period ending March 31, 2026, marks a 20% year-over-year growth.
ARM anticipates $2 billion demand for a new datacenter chip, but supply constraints limit availability to $1 billion initially.

Financial Performance Highlights

ARM Holdings (ARM) reported a significant financial uptick, with fourth-quarter adjusted earnings per share reaching $0.60, exceeding Wall Street’s estimate of $0.58 and rising from $0.55 a year prior. The company achieved record quarterly revenue of $1.49 billion for the period ending March 31, 2026, up 20% year-over-year, surpassing analyst expectations of $1.47 billion.

Licensing revenue soared by 29% to $819 million, while royalties grew more modestly by 11% to $671 million. Despite an initial surge of 13% in after-hours trading, ARM’s shares fell by 6% as CEO Rene Haas highlighted looming supply constraints tied to an additional $1 billion in demand for its new datacenter chip.

Future Projections

ARM executives report a booming customer response to their Arm AGI CPU, now observing over $2 billion in demand for fiscal years 2027 and 2028—double the initial estimate upon launch. However, while the company has secured supply for $1 billion of this demand, they are still in the process of securing additional supply for the remaining $1 billion.

The surge in demand for ARM’s chips aligns with a broader industry trend, as semiconductor manufacturers like ARM and AMD experience heightened interest due to the growing needs of AI services, which require enhanced computational capabilities.

Guidance and Market Sentiment

Looking ahead, ARM estimates an adjusted earnings per share of $0.40 for the fiscal Q1 ending June 2027, with expected revenue of $1.26 billion. Analysts had anticipated a slightly lower revenue figure of $1.25 billion. Retail sentiment on platforms like Stocktwits remains “extremely bullish,” with users discussing the supply constraints affecting chip manufacturers and their potential to increase prices. Year-to-date, ARM’s stock has surged by 114%, reflecting strong investor confidence.

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